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[Monday, February 26, 2007]
Travel with Credit Cards Abroad
What should you know when traveling with a credit card abroad?
People frequently traveling abroad are concerned with the following issues:
My card charges me a foreign exchange fee. Can I get one without? What options do I have for avoiding exchange fees?
Discover Card does not charge any foreign exchange fees, making the card an attractive choice for use in the handful of foreign countries where Discover is widely accepted. Unfortunately, it only works in Canada, the Caribbean, Latin America, and soon parts of China. If you are going to countries not on the Discover list, American Express cards carry a flat 2% exchange fee. There are no intermediate bank fees to deal with, and American Express is accepted in many more locations than the mostly-American Discover Card.
But if you are thinking about using a Visa or MasterCard, the picture becomes more complicated. Each of those services charges a 1% fee for uses abroad, but then the issuing bank may charge additional fees on top of that, typically around 2% for a total fee of 3% of each transaction.
What are the lowest fees from each bank? What is the average exchange fee that banks charge?
Leading credit card issuers like Citibank, Bank of America/MBNA, and Chase add a 2% surcharge onto foreign transactions, in addition to the 1% that Visa or MasterCard charges. Wells Fargo and Capital One are known for their low foreign currency fees, and you may do even better with a card from your local credit union or a regional bank. Shop around and ask for details about each card's currency translation charges.
Another way around foreign exchange fees is to use a debit card rather than a credit card. Debit cards often don't have exchange fees, and since they are usually part of the MasterCard or Visa networks, they can be just as convenient as credit cards.
All of these fees are the same regardless of which foreign currency you need to convert from, and in most cases, all cards from the same bank will have identical fee schedules too. It does not normally matter whether you have a standard credit card or a gold/platinum one for the purposes of exchange rates and foreign exchange fees.
Some cards use the currency exchange rate of the date of each transaction, while others rely on rates from the day your statement is processed. It's something to keep in mind, but it is next to impossible to predict which way currency rates will move, so this should not be a major consideration when you choose your card.
If I lose my credit card while abroad and want a replacement, can it be arranged?
Yes, all of the major card services offer card replacement services even when you're traveling out of the country. The international assistance number for your bank or card service can usually be found on the back of your card; make sure to write this down and keep it separate from the card itself, so you have the phone number available if you do lose your card.
In case your card does not have a customer service number for international calls on it, you can make a collect call directly to the credit card company at the following numbers:
MasterCard: (636) 722-7111
Visa: (410) 581-9994
American Express: (336) 393-1111
Discover: (801) 902-3100
No matter how you contact the card issuer, these help lines are manned 24/7 by customer service representatives that have been specially trained to help you replace a lost or stolen credit card. Just keep in mind that the process may take a few days longer than it would inside the United States, particularly in rural areas.
I heard about American Express 'Emergency Card Replacement Service' and 'Emergency Cash Assistance'. How do they work? Do Visa and MasterCard cards from major banks offer similar services?
The Emergency Card Replacement Service provides a way to replace a lost or stolen card very quickly and with a minimum of hassle. First, you contact the nearest American Express Travel Service or Representative Office. Give them your American Express card number, and describe when and where it was lost. A replacement card will be issued free of charge. You can pick your new card up at your nearest Travel Office, or have it mailed to wherever you are staying such as your hotel room.
Most MasterCard and Visa cards have a similar service. These card service companies do not have travel offices, but will find a nearby partner such as a local bank or large merchant where you can pick up your replacement card. Discover Card will only send replacement cards to your home address, so you will not be able to get a replacement card until you return home from your travels.
With American Express Emergency Cash Assistance, you can go to one of their 2,200 Travel Offices and cash a personal check for up to $1,000. Only the first $50 will be provided in cash, and the balance in traveler's cheques. If you have no personal checks with you, American Express can provide you with a blank check if you can provide some pertinent information such as your personal checking account number and your banking institution's name and address. The rate will generally be competitive with the exchange rates at major banks, and you can also exchange any US dollars in cash you brought with you.
With a Visa or MasterCard you usually can obtain a cash advance against your account from a foreign bank. The bank will take your passport number and your credit card number and phone them both into a central computer to prevent you from exceeding the established limit by repeating the transaction at other banks.
Which countries or parts of the world generally accept American Express, Visa / MasterCard, Discover?
Visa and MasterCard are generally accepted in most urban areas around the world, and acceptance is spreading into rural and developing areas as well. Visa is probably the most recognized card worldwide. The exception is in countries where the fees charged to the merchant clash with the local culture, as in the Netherlands and some parts of Mexico. Contact your bank through the customer service number on the back of your card to check the level of acceptance you should expect where you are going.
American Express is accepted almost anywhere in North America, Western and Southern Europe, Southeast Asia (South Korea, Japan, Singapore, and so on), and in the cities of New Zealand and Australia. Thanks to a longstanding reputation as the card of choice for affluent travelers, the card is also generally accepted in areas of heavy tourist traffic, such as the historical and cultural centers of Europe and the Far East, and near popular beach resorts worldwide.
Discover Card has fewer international acceptance locations than any other major credit card. International acceptance includes portions of Latin America, Canada, Mexico, Caribbean Islands, and soon Discover Network cardholders will be able to use their cards throughout China.
What do I do if my credit card isn't widely accepted at the destination to which I'm traveling?
In cases where your card is not likely to be accepted everywhere, you may be better off with a combination of traveler's cheques and cash in the local currency. Keep in mind that the cheques often have a 6% to 7% fee, depending on the issuing bank. Shop around for lower-fee or no-fee cheques. The benefit to having traveler's cheques, even with extra fees, is that they can be replaced easily if you lose them. You can't do that with cash.
If you go with cash, shop around for the best exchange rates. Start with your local bank or credit union, or find out if the rates tend to be more favorable in the destination country. You can also look up an American Express Travel Office and do your currency exchange through it. And many American banks have branches across the globe, not just American Express. Contact your bank and ask about offices near your planned location.
If I need to withdraw cash in an emergency situation, what is the best way?
Contact your card company first and ask about their emergency cash program. American Express, Visa, and MasterCard may be able to help you out with small sums in cash and traveler's cheques, drawn either from your credit line or from your bank account back home. Contacting a local bank could also give you access to the funds in your American checking or savings account. Bring your account number, the bank name and routing number, and a picture ID (your passport or driver's license works well).
If all else fails, you can use your debit card at a local ATM. That way, you get the generally favorable exchange rates of the bank, but the downside is that most debit cards have transaction fees for international withdrawals. If yours does not, this could in fact be your best option overall.
Try to avoid exchanging your US currency at the airport or hotel, as their rates are generally not nearly as favorable to you as the other options. And withdrawing cash from your credit card at the ATM will almost certainly be the most expensive way of getting access to money in the local currency. Banks and credit card travel offices are generally the best choices for currency exchange.
When I use my credit card for a cash advance abroad, what will it cost? Let's say I will withdraw $500 will I be charged a Cash Advance fee and Foreign Exchange fee on top of that, and also pay a fee for an ATM use?
Again, this depends on the card type and your specific card. Visa and MasterCard charge a 1% foreign exchange fee, and card issuers such as MBNA or Chase typically add another 2% currency fee and a 3% cash advance charge. That's 6% of your transaction, or $30 for a $500 withdrawal.
But many smaller banks and credit unions don't add a full 2% to transactions made abroad. Even some bigger institutions such as Capital One and Wells Fargo would charge only the 1% international fee imposed by the card service plus the standard 3% cash advance fee. A total of 4% of $500 equals $20 of fees in that case, again excepting any costs the local bank might charge.
And many US banks have offices or affiliates around the world, and may not charge any ATM fees when you use their cards in affiliated ATMs. Contact your bank to find out the name and locations of any local affiliates at your destination.
American Express charges a 2% fee for all foreign transactions, plus a 3% cash advance fee. Our $500 withdrawal will then cost us $25, plus whatever ATM usage charges the local bank adds.
Discover Card lets you obtain cash advances at most of the major banks in the Caribbean, as well as in Sears stores and some casinos in Canada. There are no currency exchange fees, so the only fee involved would be the 3% cash advance fee (with a $5 minimum) plus what the local bank charges. In this example, it could cost as little as $15 to withdraw $500. That's just half of what your average Visa or MasterCard transaction would cost you.
Are there limits on withdrawing cash on top of the limits set by my card issuer?
No, your general cash withdrawal limit is the only limitation that applies. There is no separate international cash withdrawal limit to worry about. On the other hand, you cannot max out your withdrawals in the US, and then expect to withdraw more from other countries, either.
I heard American Express has a lot of travel locations around the world; if I go there, will I be able to get cash at a better rate?
American Express Travel Offices are commonly found across the globe as they also act as travel agents there are more than 2,200 offices worldwide, and they can be found even in places not known for accepting American Express cards. The rate will generally be competitive with the exchange rates at major banks, and the office may be useful for exchanging cash or personal checks, as well as providing other services you might need. Call (800) 668-2639 to find the addresses and phone numbers of Travel Offices along your route.
Some banks have foreign offices as well, particularly the larger institutions such as Citibank, Bank of America, Wells Fargo, and JP Morgan Chase. Contact your bank to find out if they have any offices in your nation of destination.
If I have a dispute with a merchant abroad, lets say I was erroneously charged twice for the service provided, will it be handled differently from the dispute within the US? I know I have to contact the merchant and try to resolve the problem myself before my bank will do anything, at least in US disputes. But what if I cannot contact the merchant in the other country and do not speak the local language?
You should go through the same procedure for disputed charges as you would for a domestic charge dispute. Call the customer service number on the back of your card and initiate an inquiry into the debatable charge. The credit card company will work to resolve the dispute on your behalf, and will act as intermediary between you and the merchant.
Don't worry about not speaking the language company representatives will do all the talking with the merchant. To accept your card, the seller has to have a relationship with your card company, and they will know how to handle your problem. If the merchant doesn't respond to the credit issuer's information requests, you can rest assured that he or she will be found liable, and you will not be responsible for that charge.
What else should you know when traveling with a credit card abroad?
Let your credit card company know ahead of time that you are going out of the country. That way, they will be prepared for any trouble that might arise, and the customer service representative can help you get information about your destination such as local ATMs, travel offices, or affiliated banks.
Travel with a light wallet leave most of your cards at home and only take the one or two credit cards you will get the most use out of. And it's a good idea to invest in travel pouches that can be hidden under your shirt or even under your belt. Keep your driver's license and credit cards there, along with most of your money. Have a regular wallet with very little cash and no cards in it, so you have something to hand over in case you are unfortunate enough to be robbed.
Replacing credit cards from a foreign country can take time, but the real problem can be remembering what cards were stolen and need to be canceled. Make photocopies of them and keep them with your passport in the safe in your hotel room. You have to be aware that you might be traveling to places where Americans may be viewed as very wealthy and the standard of living is more difficult. Copyright © 2005-2010 Credit-Land.com, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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